There is an old adage that taxes are the price we pay for a civilized society. People often believe this because they understand that taxes fund the government, which is perceived to maintain peace in society. But is this really true? Does taxation create a civilized society? Or does it do something contrary?
In order to answer this question, we must start by defining our terms. To begin, we must define property, since a civil society would be one in which property is respected. Property can narrowly be defined as scarce goods or resources subject to private ownership. Ludwig von Mises states that ownership “means full control of the services that can be derived from a good.”
Property can be legitimately acquired by one of two ways, as described by Chase Rachels:
“All scarce goods (including land and other means of production) are subject to private ownership, given they are acquired via original appropriation or voluntary exchange. Original appropriation/homesteading states that the first user and claimant of a previously unowned good is that good’s rightful owner… Voluntary exchange is the second just means of property ownership. This entails that one came to own something via its prior owner voluntarily (contractually) transferring title to him. Being voluntary, this method is likewise free of conflict.”
Next, we will define government. The government, as we know it, is an organization which maintains a monopoly over the service of law, defense, and justice, among other things, in a given geographical territory. A government is unique in that it is the only entity which has the legal authority to force others to purchase its services, and abide by its arbitrary edicts.
Hans Hermann-Hoppe writes that:
“A government is a territorial monopolist of compulsion – an agency which may engage in continual, institutionalized property rights violations and the exploitation – in the form of expropriation, taxation and regulation-of private property owners.” (Democracy- The God That Failed, p. 45)
Governments therefore act as a privileged class, so to speak, in that they are expressly permitted to act in a manner that any ordinary citizen could never get away with. You or I could not expropriate funds from whomever we desire, yet the government may. You or I could not kill whomever we desire, yet the government may. And you or I may not regulate behavior we deem undesirable, or what others must do with their property, yet the government may.
Lastly, we will define taxation. A tax is defined by the dictionary as “a compulsory contribution to state revenue, levied by the government on workers’ income and business profits or added to the cost of some goods, services, and transactions.” In essence, taxation is extortion.
Hoppe expounds on this, stating:
“The imposition of a government tax on property or income violates a property owner’s and income producer’s rights as much as theft does. In both cases the owner-producer’s supply of goods is diminished against his will and without his consent.” (Democracy- The God That Failed, p. 49)
Taxation, therefore, is inherently uncivilized, since it necessarily requires the violation of property rights to obtain. Since the government will take your money with or without your consent, taxation is indistinguishable from theft. But when you consider the further implications of taxation, you realize just how barbaric the institution of taxation truly is.
A victim of theft can seek recourse against his thief, and also has the legal means of defending himself. But a victim of taxation has no leverage against the government, nor the legal means of defending himself. Property which is stolen by the state is therefore exceedingly difficult to reclaim, and almost impossible to prevent.
This phenomenon also leads to high time-preferences, and causes people to become shortsighted. While a victim of theft may only be damaged temporarily, since they may seek recourse and defend themselves from future crimes, a victim of taxation is damaged in perpetuity, and will necessarily have less resources as a result.
Since victims of taxation will have less resources available to them, they will be less fixated on savings (the accumulation of goods to be consumed at a later date), and more concerned with their present consumption of goods. Taxation therefore artificially alters consumer preferences, which will further misallocate scarce resources, and have a drastic effect over the economy. Forcing consumers to act in the present creates economic bubbles that will inevitably burst once the artificial demand diminishes.
Furthermore, Hoppe is keen to note that:
“Where nothing has first been produced, nothing can be expropriated; and where everything is expropriated, all future production will come to a shrieking halt.” (Democracy- The God That Failed, p. 19)
This indelible fact further adds to the barbarity of the state. In order for the government to impose a tax, there must first be a production of resources. But in order for there to be a production of resources, goods must first be available and remain untaxed by the government. Therefore, the more the government taxes its citizens, the less resources there are available to be produced.
Moreover, as a greater number of non-productive citizens benefit from the redistribution of wealth via taxation, the less of an incentive the productive members of society have to continue producing, since they cannot reap the benefits of their own wealth. Taxation therefore causes society to be inherently less productive, and worse off as a result.
How, then, can it be claimed that taxes are the price we pay for a civilized society? The government is inherently uncivilized, and taxation alters consumer preferences in a way that has a negative effect over the economy, and decreases productivity in a given society. When the production of wealth via legal, capitalistic means becomes disincentivized, black markets and violent crime are incentivized as a result, leading to the further demise and decivilization of a society. Taxation therefore breeds an unproductive culture of crime and poverty.
In short, taxation is the barbaric price we pay for an uncivilized society. This is an inalienable truth.